A commercial property mortgage differs from residential property mortgage because the building being purchased with the commercial mortgage is to be used for the purposes of a business rather than just to live in. The property will be used as collateral for the mortgage and the mortgage company will continue to have a legal right over the mortgaged property until the mortgage has been fully repaid.
A few examples of the use of a commercial property mortgage would include purchasing a new building with a view of it being used as a new head quarters for a company, a company purchasing a new warehouse in order to expand production of new products or to renovate and extend an existing building which is being used by a company. Obtaining a commercial property mortgage can be essential in order to allow the company to expand and move on to larger and more modern buildings.
The way a commercial mortgage application is assessed also differs from residential mortgages. With a commercial mortgage the company will assess the value of the property, if the property will grow in value and if the property will allow the company to expand and bring in more revenue as a way of repaying the mortgage in the future. The interest rate placed on a commercial mortgage is usually higher compared to residential mortgages, but they are also negotiable depending on the strength of the case.
Applying for a commercial property mortgage can be a highly stressful and complicated procedure especially for a busy business owner, commercial mortgages have many more terms and criteria’s compared to residential mortgages. For these reasons many businesses hand over the responsibility to a qualified commercial mortgage broker, an experienced mortgage broker will help the business by scouring the mortgage market and finding the best deals based on the evaluation performed on the business to find out their needs and situation. The broker will also help with the necessary application paperwork and will advise the business every step of the way. This kind of service can take a lot of weight off the business owner’s shoulders; the commercial mortgage broker will usually find a better deal also.
Finding the right property mortgage is essential regarding allowing the business to grow and expand, it is very important that the business assess every aspect and research the market extensively.